We can look back and laugh about the infamous toilet paper shortage in early 2020 (and cross our fingers it won’t strike again), but it serves as an example of the major supply chain disruptions COVID-19 caused here in Australia and around the world.

This compounded an already downward trend, with a 2020 Australasian Supply Chain Institute report revealing the overall maturity of Australian supply chains fell by six percentage points between 2018 and 2019.

While we may now have a “square to spare”, ongoing border restrictions and drastically altered consumer behaviour means retailers need to shore up their defences to ongoing supply chain turbulence.

When looking for bottlenecks to address disruptions, retailers tend to focus on the physical and logistical aspects of the supply chain. But for those looking to become masters of supply and demand, and ride out ongoing turbulence, they can’t afford to overlook internal blind spots. In particular, inefficiency accounts payable processes compound supply chain interruptions, straining vendor relationships, jeopardising operations, and ultimately affecting revenue.

So, how can retailers take back control and transform their financial processes? The answer lies in automation technology, which gives them access to real-time, accurate supply chain information that strengthens vendor relationships and ensures payments are made on time.

Identifying what’s blocking vision

There are two critical pieces to keeping the goods coming into your business so you can meet demand: strong vendor relationships and real-time insight into cashflow for decision-making.

When retailers rely on paper-based workflows, inefficiencies that negatively impact the supply chain abound. For starters, manual invoice processing is time-consuming and often cause delayed payments. When retailers don’t pay vendors on time, not only can they suffer late payment penalties, but they also strain relationships.  But it can also strain the relationship with the vendor. If a supplier has a limited quantity of a material, who are they more likely to do business with – a company that always pays on time or one notoriously late in making payments?

Retailers’ decisions are only as good as the information upon which they’re based. Lengthy processing times – like logging into supplier portals to gather information – impede visibility into cash flow, making it difficult to know when to order more or less of a certain material or item.

Then you have the joys of manual data entry – every retailer’s favourite task, right? Keying and re-keying data from one application to another and manually updating financial data in your enterprise resource planning (ERP) platform is time-consuming and prone to errors. It also takes longer to update systems if, and when, the terms of a contract change. Inaccurate and outdated accounts payable data can result in a failure to pay suppliers within the agreed upon terms, which puts a retailer at a greater risk of not receiving the goods they need to meet customer demand.

Finally, a strong vendor relationship starts with a positive experience from day dot. If retailers are manually onboarding new suppliers, they’re slowing things down before they even start. Once suppliers have an image of a retail organization as slow and clunky, it’s hard to change perceptions down the track.

Taking control to gain visibility

Fortunately, retailers can take action by giving their finance departments and personnel visibility into internal supply chain blind spots. This is where digital transformation comes in. Digitally transforming these processes includes embracing electronic invoicing to facilitate accurate payments, automating accounts payable approval workflows so staff can focus on external supply chain issues, and using automation software to gain better insight into how the business is spending money.

On top of this, an accounts payable automation solution that integrates with a retailer’s existing ERP system can put an end to the manual re-keying of data to reduce errors and keep vendor relationships running smoothly.

By digitally transforming internal workflows, retailers can work more efficiently with procurement and provide more detailed and reliable data for order placement. Lean production and improved efficiencies have helped many businesses reduce working capital, but the threat of “land grabs” for materials makes it imperative for retailers to find the right balance. Procurement can rely on the improved visibility into cashflow to adjust orders appropriately and prevent the business from becoming a victim of price fluctuations caused by supply and demand issues. 

The events of the past 18 months have taught us disruption is inevitable, unpredictable, and ongoing. While retailers can’t control every aspect of their supply chain, they can build a better front to navigate the choppy waters. By turning to technology, retailers can strengthen vendor relationships, gain better visibility, and make better decisions to be ready for the uncertainties of today – and tomorrow.

Andy Mellor is regional vice president for Australia and New Zealand at Kofax.